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TOPEKA — Independent oil-and-gas businessman Ken White says the industry in Kansas was placed on life support in wake of the pandemic-driven destruction of demand and the concurrent price shocks tied to a market-share clash between Saudia Arabia and Russia.
There are many statistics illustrating depth of the clear and present danger. Consider this: Annual state severance tax revenue from oil and gas stood at $125 million in 2015. The revised projection for severance tax revenue is $7 million for 2021.
"It’s brought exploration, production of oil and gas in Kansas to a complete standstill," said White, of White Exploration in Wichita.
He said wells were being shut down because barrel prices wouldn’t cover operating expenses. Last year at this time, more than 30 drilling rigs were in operation. Now, there are fewer than five.
David Bleakley, of Colt Energy in Fairway, said economic reality stalled drilling and pumping operations. Not all of those companies will be viable after resumption of nonessential business activity, he said.
He said federal loans through the Paycheck Protection Program funded with $650 billion will keep employees on the payroll in the short term, but won’t be a panacea.
"It’s a way to get some money to people and keep them working," Bleakley said.
Ed Cross, president of the Kansas Independent Oil and Gas Association, said the price-and-demand crisis was "devastating" for an industry predominantly operated by small businesses in this state.
He said the stakes were high for an industry supporting 118,000 jobs across Kansas.
"One thing that could help the near-collapse of the domestic oil industry is simple — get people back to work," Cross said. "The longer this goes on, the deeper you dig the hole, the harder it is to crawl out. The solution for our industry, and everybody, is you’ve got to get people back to work."
A week ago, the price of the U.S. benchmark crude fell from $15 a barrel to minus-$40 a barrel as traders paid someone else to deal with their contracts. The West Texas market also suffered, with the barrel price falling from $16 to minus-$37. Typically, the price of Kansas common crude sells for $8 to $10 less per barrel than the West Texas variety.
Prior to the unprecedented price crash, Russia and Saudi Arabia launched a brutal conflict for market dominance. Both countries adopted untimely production increases in an effort to glut the market.
U.S. Rep. Ron Estes, a Kansas Republican, said legislation introduced in Washington, D.C., would appropriate $3 billion to buy U.S.-produced crude for the United States Strategic Petroleum Reserve.
"During this global health crisis, it’s imperative that we support our oil and gas workers in Kansas and throughout the country," Estes said. "This legislation not only provides relief for our energy producers, but it improves our economic and national security."
Gov. Laura Kelly agreed to a settlement with two Baptist churches challenging her executive order limiting religious services to no more than 10 people, even if members complied with social distancing guidelines to avoid spreading COVID-19.
The resolution to the lawsuit filed in U.S. District Court would allow congregations in Junction City and Dodge City to conduct in-person services if attendees complied with safety protocols. The deal announced Saturday night created a window for the governor to revise her mass-gathering order so it would no longer apply to religious meetings.
"While I am confident that we have the law on our side, the agreement with these two churches will allow us to move forward and focus our efforts on mitigating the spread of the disease and working to restart the economy," Kelly said.
On Sunday, Kansas Department of Health and Environment said deaths related to COVID-19 had risen to 118 and testing showed 3,174 cases of infection. The three populous counties of Johnson, Sedgwick and Wyandotte account for 1,300 cases, while meatpacking counties of Ford, Finney, Seward and Lyon reported in excess of 1,000 cases.
The Democratic governor is expected to soon issue new executive orders relaxing mandates crafted to reduce gatherings where the virus could be easily spread. Her stay-at-home order helped widen the state’s economic meltdown and surge in unemployment.
Attorneys with the Alliance Defending Freedom, based in Arizona, stepped in to represent Pastor Steve Ormord, of First Baptist Church in Dodge City, and Pastor Aaron Harris, of Calvary Baptist Church in Junction City. Their civil suit asserted Kelly’s order regarding religious services conflicted with U.S. and Kansas constitutions.
Alliance Defending Freedom senior counsel Ryan Tucker said the deal with Kelly created a 14-day extension of the temporary restraining order against the governor and gave her time to amend the mass-gathering ban to delete unconstitutional limits on churches.
"Singling out churches for special punishment while allowing others to have greater freedom is both illogical and unconstitutional," Tucker said.
On April 18, U.S. District Judge John Broomes in Wichita issued a temporary restraining order preventing application of Kelly’s mass-gathering rule to the two churches. The judge said initial arguments made it likely plaintiffs would prevail with a claim the governor's restriction of religious gatherings was unconstitutional.
Tyson Langhofer, of Alliance Defending Freedom, filed an "agreed" court document Saturday that said negotiations had been ongoing since a Thursday meeting on the case. His filing said Kelly’s counsel had shared that the governor wouldn’t extend some restrictions included in previous executive orders past May 3.
"Immediately after the court hearing, counsel for plaintiffs and defendants began engaging in comprehensive, good-faith discussion," Langhofer said.
Kansas House Speaker Ron Ryckman, R-Olathe, said the governor’s goal of keeping people at home and safe was sound, but she shouldn’t have pursued a system that placed greater emphasis on restraining church attendance than on going to a strip mall.
"The state cannot and should not set up a double standard where people are allowed to gather at an ice cream shop but arrested for gathering at a church," Ryckman said.
Senate President Susan Wagle, a Wichita Republican competing in the GOP primary for U.S. Senate, said the governor made the correct decision to surrender on the church front. She said the order was "blatantly discriminatory."
Attorney General Derek Schmidt had advised local law enforcement officers not to enforce the church order signed by Kelly.
Top Republican legislative leaders voted to revoke Kelly’s directive on church gatherings, but the governor challenged their action before the Kansas Supreme Court. The justices let her order stand, but didn’t resolve whether it violated basic freedoms. The federal lawsuit was in response to the limited state Supreme Court finding.
Kelly said testing since the federal case was filed April 16 in U.S. District Court showed COVID-19 had exploded from 51 cases to more than 450 cases in Ford County, home to one of the plaintiff churches.
"I know this is a difficult time for everyone," Kelly said. "Our advice to all Kansans remains the same: stay home and stay safe. We are bending the curve, but we must continue to be vigilant in our mitigation efforts."
U.S. Rep. Sharice Davids, a Democrat representing the 3rd District in the Kansas City area, said more attention needs to be placed on responding racial disparities in infection and death rates.
Across Kansas, KDHE said, 376 black people tested positive for the virus, a rate of 172 per 100,000. More than 1,800 white people tested positive for a rate of 73 per 100,000. There’s also a racial gap in death rates for COVID-19. Fatalities among white people in Kansas stand at 2.3 per 100,000. For black people, the rate is 16 per 100,000.
Davids said 23% of Wyandotte County residents were black, but were more than half the people testing positive for coronavirus in the county. Blacks represent two-thirds of fatalities in Wyandotte County, she said.
"While there are complex, systematic issues that absolutely need to be addressed, right now we need to focus on getting as much help to Wyandotte County as possible," Davids said. "This includes increasing access to testing and supplies, supporting community health centers and expanding Medicaid right away."
Adrienne Vallejo Foster, a Republican running in a four-person race for the 3rd District GOP nomination, said economic and health damage of sustaining Kansas’ stay-at-home order outweighed the health risk of people returning to work and the reopening of nonessential businesses.
"Over the last month, we have watched the government grow and our personal freedoms diminish. While we must take the threat of COVID-19 seriously, we are fully capable of mitigating the spread while keeping our freedoms and reopening our economy," she said.